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4 Critical Principles of an Online Outsourcing Marketplace Feedback System

Written by: Daryl James

Article Overview: Feedback systems are such a fundamental part of making an online outsourcing marketplace work that it sticks out like a sore thumb if you don’t have one. They are designed to improve the experience of both the outsourcing buyer and the freelance provider. As a whole, these systems allow outsourcing companies to establish their own reputation as a reputable employer while reviewing the reputation of freelance providers in an effort to find the most capable and proven talent. Outsourcing companies submit feedback on freelance providers and relay their positive or negative experience so other buyers can review feedback before entering into an outsourcing relationship with that freelance provider. In theory, the entire process works great...depending on a few critical principles...

4 Critical Principles of an Online Outsourcing Marketplace Feedback System

Feedback systems are such a fundamental part of making an online outsourcing marketplace work that it sticks out like a sore thumb if you don’t have one. They are designed to improve the experience of both the outsourcing buyer and the freelance provider. As a whole, these systems allow outsourcing companies to establish their own reputation as a reputable employer while reviewing the reputation of freelance providers in an effort to find the most capable and proven talent.

Outsourcing companies submit feedback on freelance providers and relay their positive or negative experience so other buyers can review feedback before entering into an outsourcing relationship with that freelance provider. In theory, the entire process works great...depending on a few critical principles:

1) Identity Verification - If any user can create multiple profiles, there’s not enough motivation to maintain a positive reputation. If I receive a negative feedback score, and I can easily create a new profile, I’ll just create a new profile. Problem solved. System fails.

2) Transparency - If an outsourcing company can leave feedback and comments, but others can't see it, that freelance feedback won't do much good. If a freelance provider has received some negative feedback, other outsourcing buyers need to know about it. If they can't, the system fails.

3) Accuracy - The freelance feedback that outsourcing companies leave on the system must be accurate. This seems simple, but in reality is quite complex. There are a lot of factors that go into an outsourcing manager's decision about whether or not to leave positive or negative feedback for a freelance provider. If these factors aren't accounted for, the system fails.

4) Consistency - Outsourcing buyers need to collectively “grade” the same. If an outsourcing buyer is just a particularly tough critic, it might throw things off for the freelance provider unfortunate enough to come across their path. Hypercritical feedback for the freelance worker. System fails.

For the vast majority of cases, feedback systems work great (we believe our system works well too). However, there are some potential issues with #3 - accuracy of freelance feedback and the mechanisms that may negatively affect accuracy.

Let’s take a look at eBay first - they’re the founder of the feast when it comes to feedback systems, and they’ve announced some very major changes to their feedback system. From eBay’s site:

What changes are being made to the eBay Feedback system?
Sellers will no longer be able to leave negative or neutral Feedback for buyers. This change will occur in May, 2008.

Why is eBay making these changes?
No negative or neutral Feedback for buyers
The current system prevents buyers from leaving honest Feedback as they fear retaliation from the sellers if they leave a negative. This makes it hard for buyers to distinguish between sellers while making bidding or buying decisions. In addition, when buyers receive negative Feedback, they reduce their activity in the marketplace, which in-turn harms all sellers.

So, why have eBay buyers not been leaving accurate feedback. I believe it stems from personal motivation. If I’m an eBay buyer and I have a bad experience, I could leave negative feedback, but that might end up hurting my reputation if I get retaliatory negative feedback. So, I choose not to leave the negative feedback (after all, it only benefits the next user, not me).

Now let’s look at an online outsourcing marketplace like oDesk. I don’t think it’s as simple as the eBay feedback system since eBay is all about point transactions (the transaction is arranged, paid for, and completed in its entirety within a couple of days). At oDesk, it’s all about outsourcing relationships, which are often ongoing and may result in repeat transactions. Considering this, let’s look at some of the possible issues that may arise near the end of an outsourcing relationship? Let’s say that outsourcing buyer x has been working with freelance provider y for 3 months on a website. It’s nearing completion, and now there are a few things that might happen:
- If everything went great, both the outsourcing and freelance parties will know that perfect 5 feedback scores will result.
- If the freelance provider is expecting a 4-4.9 feedback, they might email the outsourcing buyer explicitly asking for a 5.
- If the freelance provider is expecting a lower score, they may, in the worst cases, blackmail the outsourcing buyer, e.g., “I’ll take down your site, if you don’t give me a good freelance feedback score.” If you’re outsourcing buyer x, you might as well give a good freelance feedback score since you don’t want to risk your site coming down.

The freelance provider in the third case is obviously malicious, but can a similar example be found among outsourcing buyers? Are there ever any issues that crop up with buyers of outsourcing services? Unfortunately, the answer is yes.
- If it’s been 3 months and an outsourcing buyer has exceeded their budget but still has change requirements and the need for more freelance work, they may threaten bad feedback scores unless the freelance provider finishes the remaining outsourcing work for free.
- If an outsourcing buyer is actually quite happy with the work of the freelance provider and needs to retain full-time work, the outsourcing buyer (being of low moral character) may provide a low freelance feedback score so as not to lose the provider to other interested outsourcing buyers (or because the outsourcing buyer does not want the freelance provider to increase the hourly rate based on their strong reputation).

While these specific examples exist in only the minority of cases in online feedback systems, they do have a negative effect on the whole system itself. The only way to ultimately resolve the issues is to foster open, honest discussion among both the outsourcing and freelance members of the community about the feedback system.

This article is just an observation on a problem statement, with solutions ‘to be determined’. In truth, it seems that eBay hasn’t completely figured it out yet, and I can certainly say that oDesk hasn’t figured everything out. However, I can say that we’re dedicated to focusing on both outsourcing buyer and freelance provider quality, and there’s no doubt that the feedback system and its integrity is critical to the success of our online outsourcing marketplace.

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Article Tags: accuracy, consistency, critical principles, feedback systems, marketplace work, motivation, negative experience, negative feedback, new profile, outsourcing buyers, outsourcing companies, outsourcing company, outsourcing relationship, profiles, reputation, score, sore thumb, transparency



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